Danish Crown’s Strategic Overhaul: Closing Ringsted Abattoir and Pioneering a New Direction in Rochdale
Introduction
Danish Crown, Europe’s largest pork producer, is taking a bold step in redefining its operational strategy by shutting down one of its largest abattoirs in Ringsted, Denmark. This move, resulting in the loss of almost 1,200 jobs, is part of a broader strategic redirection that includes a significant investment in a state-of-the-art bacon facility near Manchester, UK.
The Closure of Ringsted Abattoir
The decision to close the Ringsted facility comes after a challenging two years for Danish slaughter pig production. A diminishing supply of pigs and declining efficiency levels at Danish abattoirs have compelled Danish Crown to consolidate operations. The closure is poised to affect nearly 1,200 employees, marking a significant shift in the company’s operational footprint in Denmark.
Compensation and Future Job Creation
In response to the closure, Danish Crown has allocated approximately DKK 250 million (£27m) for reinvestment in other areas, which is anticipated to generate up to 300 new jobs in cities like Horsens, Herning, Vejen, and Blans near Sønderborg over the next three years. This strategic reallocation aims to mitigate the employment impact and bolster economic activity in other regions.
Shifting Focus to Processed Products
Amidst the operational downsizing in Denmark, Danish Crown is pivoting towards higher-value processed products. The company plans to invest nearly DKK 1 billion (£100m) in a new, cutting-edge bacon factory in the UK. This facility is expected to produce over 200 million packets of bacon annually, already secured by contracts with three major British customers. This move is designed to enhance Danish Crown’s presence in processed meat products, moving away from being primarily a raw material supplier.
Strengthening Market Position in Europe
The new direction not only aims to streamline production but also reinforces Danish Crown’s ambition to remain a leader in the European meat-based food sector. By focusing on processed products such as bacon and pepperoni, which have shown significant market demand in Europe, Danish Crown is positioning itself to better meet consumer preferences and market trends.
Management Commentary
Jais Valeur, Group CEO of Danish Crown, expressed that the decision to close the Ringsted abattoir was difficult, especially given the impact on many skilled employees. However, he emphasized that these changes are crucial for Danish Crown to evolve into a modern food company with improved operational efficiency and expanded product offerings in key European markets.
Regulatory Changes and Stability Tools
In response to the fluctuating supply of pigs and the need for stable production capacity, Danish Crown has introduced a new regulatory framework. This includes a stability tool that limits the ability of cooperative owners to adjust their pig supply volumes without a 12-month notice. Additionally, penalties will be enforced for delivery fluctuations beyond permitted levels. This measure aims to stabilize the supply chain and maintain competitive pricing within the European market.
Board Perspective
Asger Krogsgaard, Chairman of the Board of Directors at Danish Crown, stressed the importance of these changes for the future sustainability of the cooperative. He noted the financial burden of constantly adjusting capacity, which has necessitated the strategic shift to stabilize supply and enhance profitability.
New Opportunities for Piglet Producers
In a recent development, Danish Crown has presented a model allowing piglet producers to become cooperative owners. This initiative is designed to integrate more producers into the cooperative, providing them with a stake in the company and aligning their interests with the broader corporate objectives.
Conclusion
The strategic overhaul by Danish Crown, marked by the closure of the Ringsted abattoir and the investment in a new bacon production facility in Rochdale, represents a significant transformation in the company’s approach to its operations and market strategy. By focusing on processed meats and stabilizing supply chains, Danish Crown aims to strengthen its position as a leading meat-based food company in Europe, ensuring long-term sustainability and growth in a changing global market.
Related: Archived: Danish Crown cuts 350 jobs due to feed & energy crisis
Check out: Top 10 Pork Producers in Europe
Source: Pig World
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